Halister News

(Bloomberg) -- Trump administration is likely to have passed some of its fiscal initiatives by 2H 2017-1H 2018, yet “not enough hike risk” is being priced into next couple of years, Credit Suisse analysts led by Praveen Korapaty wrote in note on Monday.

• Without an increase in real neutral rate or unmooring of inflation expectations, Fed hiking cycle is still likely to be “somewhat shallow” and suggests cycle could near end in 2018
• Strengthening data “quite clearly leaves the Fed’s December hike intact”; Nov. payroll gains of 178k were “solid”; 30bp decline in unemployment rate was “surprising”; weak earnings may have been partly due to “calendar effect”
  • Credit Suisse expects “outsized” moves in unemployment and earnings to “revert some” in coming months
• Recommend establishing EDM7-M8-M9 belly cheapening fly exposure
  • Risk of such a trade is that a Trump Fed proves “significantly more accommodative”